Correlation Between CompuGroup Medical and PREMIER FOODS

Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and PREMIER FOODS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CompuGroup Medical and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompuGroup Medical SE and PREMIER FOODS, you can compare the effects of market volatilities on CompuGroup Medical and PREMIER FOODS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CompuGroup Medical with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and PREMIER FOODS.

Diversification Opportunities for CompuGroup Medical and PREMIER FOODS

0.33

Correlation Coefficient

CompuGroup Medical  PREMIER FOODS

Weak diversification

The 3 months correlation between CompuGroup and PREMIER is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and CompuGroup Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CompuGroup Medical SE are associated (or correlated) with PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and PREMIER FOODS go up and down completely randomly.

Pair Corralation between CompuGroup Medical and PREMIER FOODS

Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the PREMIER FOODS. In addition to that, CompuGroup Medical is 2.68 times more volatile than PREMIER FOODS. It trades about -0.02 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about 0.11 per unit of volatility. If you would invest  153.00  in PREMIER FOODS on October 5, 2024 and sell it today you would earn a total of  73.00  from holding PREMIER FOODS or generate 47.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CompuGroup Medical SE  vs.  PREMIER FOODS

CompuGroup Medical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days CompuGroup Medical SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, CompuGroup Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

PREMIER FOODS

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days PREMIER FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain technical and fundamental indicators, PREMIER FOODS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CompuGroup Medical and PREMIER FOODS

The main advantage of trading using opposite CompuGroup Medical and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, PREMIER FOODS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.

The idea behind CompuGroup Medical SE and PREMIER FOODS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.